Dominant undertaking under the

M.R.T.P.Act M.R.T.P.Act
An undertaking which by itself or alongwith inter-connected undertakings produces, supplies,
distributes or other controls not less than 1/4th of the total “goods” or “services” produced or rendered in India.

The dominance is to be determined on the basis of figures published by on the basis of figures published by
such authority as is specified by the such authority as is specified by the Central Govt. and is to be reckoned
Central Govt. and is to be reckoned in terms of the M.R.T.P. in terms of the M.R.T.P. (Classification of Goods)
Rules, (Classification of Goods) Rules, 1971. 1971.
Dominant position under the Competition
Act:
A position of strength enjoyed by an enterprise in the relevant market, in India which enables it to -
(i) operate independently of competitive forces; or
(ii) affects its competitors or consumers or the relevant market in its favour.
No specific test of market share or assets or turnover is prescribed to determine
dominance in most of the developed competition regimes including:
Belgium, Cyprus Finland
France India Ireland
Italy Japan Mexico
Netherlands Spain Sweden
Switzerland Turkey
Presumption of dominance or triggering point to
scrutinize dominance in some of the competition
jurisdictions is as under:
Brazil - 20%
Canada - 60%
Denmark - 40%
Germany - 50%
Israel - 50%
Poland - 40%
Norway - 60%
Russia - 65%
South Africa - 45%
U.K. - 40%
USA - 70%
Under European Law a dominant market position is ‘……a position of economic strength enjoyed by an
undertaking which enables it to prevent effective competition being maintained
on the relevant market by affording it the power to behave to an appreciable extent independently of its
competitors,
customers and ultimately of
consumers’.
STAGES INVOLVED TO DETERMINE STAGES INVOLVED TO DETERMINE
ABUSE OF DOMINANCE ABUSE OF DOMINANCE
• Relevant market
• Existence of dominant position
• Identification of specific harmful
conduct
A firm may achieve dominance
through –
• Innovation
• Superior product
• Affordable price
• Efficient distribution system
• Satisfactory after sale service
• Entrepreneurial efforts
VIRTUES OF DOMINANCE
- CAPABILITY TO LEAD
- UNDERTAKE R & D
- HEAVY ADVERTISEMENT

Factors to be taken into account to

determine dominance:
• Market share of the enterprise
• Size and resources of the enterprise
• Size and importance of competitors
• Commercial advantage over competitors
• Service network,
• Dependence of consumers
• Dominant position as a result of statute or Govt.
company.
• Entry barriers
• Countervailing buying power
• Market structure
• Contribution to economic development and
• Any other factor
Circumstances are beyond one’s control
but conduct is within our power”
- Jesus Christ
Inter-link between
Anti-competitive agreements and
mergers
Joint Dominance
Single Dominance
Situations when abuse of dominant position is
prohibited:
• Imposition of unfair or discriminatory condition in the
purchase or sale of goods or services or their prices
• Limiting or restricting production or technical
development,
• Denial of market access
• Supplementary obligations
• Use of dominant position in one market to protect or
enter into another
Powers of the Commission in Powers of the Commission in
respect of abuse of dominance respect of abuse of dominance
• To grant such interim relief during the enquiry. To grant such interim relief during the enquiry.
• To award compensation To award compensation
• To impose penalty on the guilty To impose penalty on the guilty
• To recommend division of To recommend division of
undertaking. undertaking.
• To issue “Cease & Desist” Order To issue “Cease & Desist” Order
Under Section 27 & 27A
of the M.R.T.P.Act, the
Central Govt. is vested
with power to “Divide an
Undertaking” or
severance of interconnection
on the
recommendation of
M.R.T.P. Commission.
• The Central Govt. on the recommendations of CCI continues to be
vested with power to give directions of “Division of an Enterprise” enjoying dominant position.
• “Marriage” and “Divorce” amongst undertakings forms part of law.
The Competition Act with many innovative concepts coupled with power to impose penalties is likely to let in
harsh glare of sun light to disinfect pernicious Anti- Competitive Practices.
Cases decided by Canadian Competition Tribunal
• Nutrasweet – 95% share in artificial sweetener market; imposed exclusivity, allowed discount only to those
who will use logo & name, compelled customers to make all their purchases.
• Laidlaw – 87% market share, engaged in commercial waste services, imposed non-compete clause,
intimidation through litigation.
• Interac – 100% market share in services associated with electronic banking network, prohibited new members
entry and higher membership fees for competing financial service providers.
• Tele Direct - Engaged in telephone directory advertising having 96% advertising space, compelled tied selling
space of yellow pages directory, adopted discriminatory practices relating to accounts and commissions, irected
to ‘Cease & Desist’ order against these practices.
• Canadian Yellow Pages Service (Canpys) – Publishes national yellow page advertising, enjoys 90% market
share in Canada, required customers to arrangement all such advertisements which can serve the province where
its head office is located, it was prohibited from maintaining head office rule.
Cases decided by European Commission Cases decided by European Commission
• Unilever - Provided freezer cabinets to Irish distributors
free of charge on the condition that they will stock only
Unilever products in the cabinets.
• British Airways - It offered extra commission to British
Travel Agencies only if they equaled or exceed their
previous years sale of tickets.
• Football World Cup & CFO - The CFO organized football world cup in France and the European
Commission found the arrangement of ticket discriminatory in as much as those who gave residential
address in France were given preference vis-à-vis those
who were residing out side France
Microsoft Corporation - A world’s largest software company found abusing its dominant position in the
marketing of personal computer operating system. The European Commission has imposed fine of US$612
million equivalent to 2630 crores Sun-Microsystems, a rival was refused to provide interface
information and consequently it contended unable to compete in work group server operating system
(WGSOS). The other allegation relates to tying of WMP
with Window-2000. Microsoft’s contention is it is intellectual property.
European Commission feels that in view of
over whelming dominance, the veil of intellect property need to be lifted and as
directed Microsoft to disclose within 120 days complete and accurate
documentation so as to allow Non- Microsoft Group Servers to achieve full
inter-operatability. It has also been directed to develop PC Operating System
without WMP within 90 days.
Japan Fair Trade Practice Commission Japan Fair Trade Practice Commission
• Microsoft – JFTC has recently warned Microsoft to scrap a provision in its licensing contracts with PC makers
that prevents them from filing patent infringement suits if they find Microsoft Software features similar to their
own
technology.
Cases decided by Italian Anti Cases decided by Italian Anti-Trust Trust
Authority Authority
Sign Sign Vs.Stetship Vs.Stetship - National Tele National Tele-communications Company communications
Company
enjoys exclusive right over the production and distribution of enjoys exclusive right over the production and
distribution of
subscribers lists and holds dominant position in down stream subscribers lists and holds dominant position in
down stream
activities that use these lists to sell services to consumers an activities that use these lists to sell services to
consumers and
businesses. Refusal to sell subscriber list on CD businesses. Refusal to sell subscriber list on CD-Rom was Rom
was
found to be abuse of dominant position by Italian Anti Trust found to be abuse of dominant position by Italian
Anti Trust
Authority. Authority.
Telesystem Telesystem Vs.Sip Vs.Sip - The Italian National Tele The Italian National Tele-communication
communication
Company enjoyed legal monopoly over the net work and refused Company enjoyed legal monopoly over the net
work and refused
to release lines to smaller company who wish to compete in to release lines to smaller company who wish to
compete in
providing close user group services. It was found to be denial providing close user group services. It was found
to be denial of of
access to potential competitors. The Italian Anti access to potential competitors. The Italian Anti-Trust
Authority Trust Authority
ruled it as unjustified refusal aimed at preserving a dominant ruled it as unjustified refusal aimed at preserving a
dominant
position in the relevant market. position in the relevant market.
Case before the Brazilian Competition Authority Case before the Brazilian Competition Authority
• Mcdonald Corporation: - The Pizza Giant has entered
into franchises agreement with 28 Brazilian parties from
whom it collects 24% of gross sales by way of rents in
respect of premises and use of its recipes. It has
acquired all most all locations and premises around its
restaurant so as to restrict the entry of rival brands. The
formal administrative proceedings have been opened
after preliminary investigation and the case is under
adjudication by CADE